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Lloyds resets Matalan's banking covenants

Lloyds Banking Group has given Matalan some breathing space by agreeing to change the covenants on its unused bank facilities.

Matalan

The covenant change is not on a loan or Matalan’s bonds.

It is understood there was no pressure on Matalan’s debts and this remains unchanged. Matalan has a healthy liquidity position and sizeable cash balance.

Earlier this month it emerged that Matalan had entered Lloyds’ support unit for struggling businesses. This can happen for a variety of reasons, not necessarily because a business is in distress.

It came after the retailer’s online sales fell by 50.9% to £2.7m in the peak Christmas period ended January 2, while store sales fell by 6.4% to £133.8m.

Managing director Jason Hargreaves said the third quarter results were a significant improvement on the first half of the year and were achieved in a “particularly challenging market”.

Credit ratings agency Moody’s has since changed Matalan’s ratings outlook from “stable” to “negative”, amid fears it may struggle to reverse its decline in profitability.

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